STEINHOFF CEO Markus Jooste – and several other directors and executive members – bought particularly large quantities of shares in the company in June last year through single stock futures at a price of around 2200c/Steinhoff share. That caused raised eyebrows and, perhaps wrongly or perhaps completely correctly, gave the impression the directors were taking up dangerous and exceptionally large speculative positions in the share.
The graph of Steinhoff’s share price shows it wasn’t such a good transaction. By November 2007 the participants closed their positions in the single stock futures by taking up the underlying shares.
However, the transaction seems to have given the market the impression of speculative action by Steinhoff’s board – and that’s perhaps the reason why investors’ rating of the ordinary shares is still somewhat tense.
However, the company and other ordinary shareholders suffered no loss from the directors’ speculative – possibly misplaced – confidence in its share price. In fact, shareholders should welcome it when directors themselves buy shares in the company on the JSE, rather than granting themselves fat share options.
Living dangerously. Markus Jooste